CROSS-APPEALS by the plaintiff, Ludwig & Company, and the defendants, The Claviola Company and another, from an interlocutory judgment of the Supreme Court, entered in the office of the clerk of the county of New York on the 24th day of March, 1910, upon the decision of the court rendered after a trial at the New York Special Term.
John J. O'Connell, for the plaintiff.
Alton B. Parker, for the defendants.
The plaintiff, a manufacturer of pianos and other musical instruments, brought this action to procure a judgment enjoining and restraining the defendants and each of them from making or selling pianos by or under the name of Ludwig, or
any name or designation of which the word 'Ludwig' forms a principal part, whether or not the same have an interior playing attachment; from putting such name upon any part of pianos manufactured or sold by them, and for an accounting. The defendants answered separately, and a trial of the issues thus raised resulted in a judgment in favor of the plaintiff, by which the defendants and each of them 'are permanently enjoined and restrained from manufacturing, selling, offering for sale or placing upon the market pianos by or under the name 'Ludwig,' or any name or designation of which the word 'Ludwig' forms a part, whether such pianos have an interior playing mechanism or not * * *; ' and also enjoining and restraining them from 'placing or applying the said name or any name of which the word 'Ludwig' forms a part upon any part of such pianos or upon any visible portion of such instruments; and * * * from using such name or any name of which it forms a part in advertising such pianos, or on their letter heads, bill heads, or other printed matter; but this injunction shall not extend to advertisements or other printed matter which announce the fact that a playing mechanism made by the defendant John H. Ludwig is contained in a particular piano, nor to the designation of such playing mechanism as the Ludwig Player; provided the name 'Ludwig' or any name of which the word 'Ludwig' forms a part, does not appear upon any visible part of such piano.'
The defendants appeal from the whole of said judgment, and the plaintiff appeals from so much as permits defendants to advertise or designate the playing mechanism made by them as the Ludwig Player. At the trial it appeared that in 1889 the defendant John H. Ludwig and one Charles A. Ericsson entered into a partnership under the name of Ludwig & Co. for the purpose of manufacturing and selling pianos. The business of the firm was very successful and between its formation and April, 1902, several thousand pianos had been manufactured and sold by it. Such pianos had upon the fallboard the name Ludwig & Co., but were known to the trade as the Ludwig piano. In April, 1902, the plaintiff, a domestic corporation, was formed with a capital stock of $400,000, Ludwig and Ericsson assigning and transferring to it all the business
and assets of the firm in return for the bulk of the stock. For some time prior to the formation of the corporation the partnership had been endeavoring to perfect some mechanism or device which could be put inside of a piano and automatically play it. Up to this time its efforts had been unsuccessful. It had, however, perfected a device called 'The Claviola,' which was in a separate case and when used had to be attached to the outside of a piano. In the bill of sale to the corporation the business of making an automatic piano player was reserved by the firm. So much of the bill of sale as is material to the determination of the question here under review is as follows: 'We, John H. Ludwig and Charles A. Ericsson, copartners in business under the firm name and style of Ludwig & Co., in consideration of * * * hereby do bargain, sell, grant, convey, transfer and deliver unto Ludwig & Company, a corporation organized under the laws of the State of New York, its successors and assigns, all the personal assets, including good-will, of every nature and kind of the copartnership of Ludwig & Co. wherever the same may be, and in whatsoever form or condition, and all rights of the parties of the first part in and to the same, saving and excepting therefrom, however, all patents relating to automatic piano players, all machinery specially used for that purpose, material on hand, manufactured players, as well as names, trade marks, or any property of any nature or kind relating specially to the department of the business of the parties of the first part in connection with the manufacture and sale of said automatic piano players.' Within a few days after the corporation was formed, Ludwig and Ericsson entered into a written agreement by which the firm of Ludwig & Co. was continued for the purpose of manufacturing and selling automatic piano players, or for acquiring and exploiting or disposing of patents relating thereto; and at the same time they obtained the written consent of the corporation to apply the name Ludwig and use the same as the name of such mechanism. The firm continued to manufacture the Claviola and also to endeavor to perfect a device that could be put on the inside of a piano until 1904, when Ericsson withdrew from the firm, transferring to Ludwig all his interest therein, and thereafter
Ludwig continued the same business until January, 1906, at which time he had succeeded in perfecting an automatic piano player which could be placed on the inside of a piano. From the organization of the plaintiff until January, 1906, Ludwig was its president and a director, but at the annual meeting of stockholders held that month he failed of re-election to either office. Having failed of re-election, he organized the defendant, The Claviola Company, a domestic corporation, taking the larger part of the capital stock, at once became its president, and since has acted as such. Immediately upon the organization of The Claviola Company it commenced the manufacture and sale of pianos, on the inside of which was placed the automatic player perfected by Ludwig. Upon the fallboard of such pianos it put the word 'Ludwig' in large capital type, directly above which in small letters was the word 'the' and below in small letters the words 'piano player.' It also commenced to use numbers on its pianos corresponding substantially to those then used by the plaintiff.
The plaintiff contends that the defendants have no right to use the word Ludwig on pianos made by them, since Ludwig parted with such right when he and Ericsson transferred to the corporation the partnership business so far as it related to the sale and manufacture of pianos, together with the good will, trade name, etc. The defendants contend that Ludwig has the right, under the exception contained in the bill of sale, to use the word Ludwig in connection with any automatic piano player and as it is now being used on its pianos.
I am of the opinion the plaintiff's contention is correct. When Ludwig and Ericsson transferred to the plaintiff the right to make and sell pianos, including the good will of the firm, that carried with it the exclusive right to use the name by which pianos theretofore sold by the firm were generally known, i. e., Ludwig Piano, or The Ludwig & Company Piano. This fact was recognized by Ludwig himself, because after the organization of the plaintiff, and while acting as its president, he dropped the words '& Co.' and put upon the fallboard the words 'Ludwig, New York.' ...